Big Inflation Coming 3

Well, Americans voted and the winner is inflation. Half our voting populace inexplicably decided to award a second term to Obama. Four more years of mind-boggling record deficits and record national debt growth! Obama’s Administration spent roughly 50% more than the government took in, which can essentially only be financed in two ways. Borrowing from foreigners and running the printing presses.

The latter of course is pure inflation. And the Fed bent over backwards with its quantitative-easing campaigns to buy massive amounts of the Treasury debt Obama ran up on our children’s credit cards. It created trillions of new fiat dollars out of thin air to purchase Treasuries to finance Obama’s trillion-dollar-plus annual deficits. And with Obama sticking around, this dangerous trend is only going to accelerate.

The ironic thing is inflation wreaks the most damage on the people with the least. Its corrosive effects on purchasing power are felt most at the margin, among the poor and minorities whose overwhelming support of Obama carried him to victory. They apparently didn’t care about the crushing unemployment rates among blacks, Hispanics, and the young from Obama’s policies, but they will care about inflation.

Inflation is a simple supply-and-demand phenomenon, economics 101. When the supply of money grows faster than the economy, the underlying pool of goods and services on which to spend it, it takes more money to buy anything. Relatively more dollars are competing for relatively fewer things, bidding up their prices. With more dollars in circulation, each one is worth less. So prices inexorably start rising.